Is the initial franchise fee for Spray Net refundable?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
- Effective Date. This Rider is effective as of the Effective Date.
Agreed to by:
SPRAY-NET INC. ©2025 Spray-Net Inc.
SPRAY-NET INC. MARYLAND ADDENDUM TO THE FRANCHISE DISCLOSURE DOCUMENT
No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
The following is added to Item 5:
Based upon the franchisor's financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement. In addition, all development fees and initial payments by area developers shall be deferred until the first franchise under the multi-unit development agreement opens.
The following is added to Item 17:
The general release required as a condition of renewal, sale, and/or assignment/transfer shall not apply to any liability under the Maryland Franchise Registration and Disclosure Law.
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
Based on the 2025 Spray Net Franchise Disclosure Document, the initial franchise fee's refundability is not explicitly detailed. However, addenda for Maryland, North Dakota, Minnesota, and Virginia state that initial fees and payments are deferred until Spray Net completes its pre-opening obligations under the franchise agreement.
This deferral of initial fees has significant implications for prospective franchisees in these states. Since the fees are not paid upfront, but rather after Spray Net has fulfilled its pre-opening responsibilities, the question of refundability becomes less relevant. If Spray Net fails to meet its pre-opening obligations, the franchisee would not be required to pay the initial fees in the first place.
For prospective Spray Net franchisees in states other than Maryland, North Dakota, Minnesota, and Virginia, the FDD excerpts do not provide specific information about the refundability of the initial franchise fee. It is important for potential franchisees to clarify the conditions under which the initial franchise fee is refundable, and to have these conditions clearly documented in the franchise agreement. This is a crucial aspect of due diligence before entering into a franchise agreement with Spray Net.